The economic case for separatism is that it removes the focus of grievance and the source of subsidy and makes Scotland again responsible for its economic destiny.
As I explained last week, Scotland consumes about 10 per cent more than it produces. About half is Scotland’s share of British trade and budget deficits. But Scots, with average incomes about 7 per cent below the UK average, pay less per head in tax than the UK average although public expenditure there is about 15 per cent per head higher.
This transfer is the economic price the rest of Britain pays for union, and there seems little to show for it. Scottish education is relatively good, but always has been. Illness and mortality are worse than the UK average and among the worst in developed countries. The UK taxpayer’s support of urban regeneration and subsidies for large plants, now closed, has left Scotland with some of the most deprived housing estates and desolate industrial landscapes in western Europe.
The potential hole in the first budget of a separate state might, or might not, be filled by a generous settlement and a high oil price. But even the worst case is a deficit on a scale that other countries have successfully managed with modest tax increases and rigorous control of public spending, which would be desirable in any event. Scotland’s position is very different from that of Northern Ireland, where withdrawal of UK government support would lead to economic collapse. Would a separate Scotland be economically viable? The answer is plainly yes. But would a separate Scotland be better off?
In the first two centuries after Scotland’s union with England, nationalistic competition in armaments, the opportunities of empire and protectionist restrictions on trade across borders seemed to require larger states to facilitate economic growth. Scotland as part of Britain benefited accordingly. Modern Europe is different. High military spending is no longer necessary to prevent exploitation by hostile powers. Empires do not yield economic advantages any more and perhaps never did. States are service providers rather than instruments of internal and external coercion. The advantages of social homogeneity and the democratic responsiveness of smaller units translate into economic benefits.
Free trade enables small countries to thrive through specialisation. Switzerland, Finland and Iceland are today among the richest countries in the world. They do not produce the wide range of commodities their consumers demand, but buy them with the export earnings of a few industries in which they have competitive advantage, such as Swiss speciality chemicals and precision engineering, Finland’s mobile phones and forest products and Icelandic fish.
Can Scotland do the same? Last week, I described how Scotland’s strengths in heavy engineering and financial and trading services had been eroded or eliminated. In the 20th century, these capacities were replaced, not by new capabilities, but by a sense of grievance that expected, and received, public support to attract footloose assembly plants and distribution centres.
The economic case for separatism is that it removes the focus of grievance and the source of subsidy and makes Scotland again responsible for its economic destiny. The most relevant parallel is that of Ireland, although the implications are not simple. Ireland needed 60 years of independence to throw off the culture of victimhood. Only after Ireland joined the European Union did it turn its back on generations of politicians drawn from the stage set of Irish history, from the austere, romantic, impractical Éamon de Valera to the charming roguery of Charles Haughey. But, ultimately, Ireland did: and in the last two decades, it has been western Europe’s success story.
Scotland starts in a stronger position than did Ireland. It should be easier to shed the baseless sense of victimhood of the Scots than the well-founded sense of victimhood of the Irish. With Scotland (unlike Ireland) there is an entrepreneurial history and (like Ireland) a diaspora ready to participate in economic revival. In the hope that hard-headed Scots would take much less than half a century to discard the culture of complaint and the romantic appeal of apocryphal history, I would be tempted to cast a vote for the Scottish National party on May 3.